Operational Guidelines for Operation and Management of Gramin

Agricultural Markets (GrAMs)

Department of Agriculture, Cooperation and Farmers’ Welfare

Ministry of Agriculture and Farmers’ Welfare

Government of India

CONTENTS

S.No PARTICULAR PAGE

1 Preamble and New Market Architecture 1

2 Existing Market Structure and Rural Periodic Markets 2

3 Union Budget Announcement – GrAMs 4

4 Gramin Agricultural Markets – Definitions and Objectives 4

5 Advantages of GrAMs 5

6 Location of GrAMs 6

7 Structure and Management of GrAMs 7

8 Organisational Mandate 7

9 Infrastructure for GrAMs 8

10 Management Structure and Institutional Support 11

11 Management Framework and Service Charges 14

12 Professional Support, Training and Orientation 16

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Operational Guidelines – Establishment and Management of

Gramin Agricultural Markets (GrAMs)

1.0.0. Preamble and New Market Architecture

1.1.0. Agricultural marketing in common parlance refers to a series of services and

functions involved in moving the agricultural goods from the point of

production to the point of consumption, and encompasses all the activities

involved in creation of time, place, form and possession value. In India, where

landholding structure is dominated by small and marginal farmers with an

average size of about 1.1 hectares, both production and post-production

activities are challenged in terms of efficiency. Since the markets determine

the value that their produce fetch, farmers need to be integrated with a market

structure that will enable both transparency and efficiency of transaction.

1.2.0 Market structure in respect of agriculture has so far been lopsided, with major

focus on APMCs/RMCs, ever since the states came to legislate Marketing

Acts. However, these are largely primary wholesale agricultural markets

situated at an average distance of upto 50 kms from the farm gates. The

small and marginal farmers with small marketable surplus ratios (MSRs) have

not benefitted much from these, either from scale in local transactions or from

enabling marketing services to provide farmers a choice to link with

transactions at other wholesale or retail markets that are located further at

field.In order to enable the farmers in general, and those with small &

marginal holding sizes in particular, it is necessary to set up retail agricultural

market platforms in close proximity to the farm gates. These agricultural

markets can be expected to support the farmers with the choice to participate

directly, locally and in other markets, and at a more rational cost of

transaction.

1.3.0. With increasing surpluses in case of various agri-commodities, the horizon of

marketing has to expand, so that production centres and consumption centres

are connected efficiently and effectively, such that the farmer-producers are

able to capture maximum value and garner an optimal share in the final

consumers’ rupee. The ‘New Market Architecture’ recommended by the

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Committee on Doubling Farmers’ Income (DFI) and adopted by Government

is as follows:

Source: DFI Committee

1.4.0 Notably, the GrAMs, located at village level, can also initiate and service

transactions at terminal destinations, and with other primary and secondary

markets. The GrAMs would therefore serve as first mile facilitators to organise

the marketing chain, and are to be kept outside the ambit of APMC.

2.0.0. Existing Market Structure and Rural Periodical Markets

2.1.0. As of now, the agricultural market structure in the country primarily constitutes

Agricultural Product Marketing Committees (APMCs) with 2,332 number of

Principal Market Yards (PMYs) and 4,298 number of Sub-Market Yards

(SMYs) established and regulated under the provisions of respective State

Agricultural Produce Marketing (Regulation) Acts, popularly called Agricultural

Produce Market Committee (APMC) Acts. In some states like Odisha, they

are called as Regulated Market Committees (RMCs). Further, in some states,

there also exist wholesale markets, which are not regulated under the State

Acts. Kerala, for example, has 6 (six) such markets. Over the last two

decades, many states have attempted to set up direct producer-seller

markets, with varying degree of success. These go by the names of Rythu

Bazar, Uzhavar Sandhais, Krushak Bazar, Krishak Bazar, Apni Mandi, Rytha

Sante etc. The state governments/APMCs are operating and managing more

than 550 such farmer-consumer markets. The APMCs have turned out to be

highly regulatory and restrictive in their market practices. Unable to avail of

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the benefits of AMPCs on account of high transportation and transaction costs

on his small lot size, the small marginal farmer has no option but to let the

local agents and village traders function as aggregators, who tend to relieve

them of their produce at locally determined and dictated prices. These

aggregators/middlemen transport the produce to APMC Market Yards and

auction at better prices without any specific value addition, thus, depriving the

farmer-producers of optimal or market linked price realization. In sum, the

current market-structure is not farmer-friendly and hence the need for an

alternate market architecture. An important pillar of the new market

architecture, that the DFI Committee has recommended is establishment of

22,000 number of primary retail agricultural markets called ‘PRAMS’, by

taking advantage of the existing periodical markets across the country, which

are commonly known as ‘Haats’ or ‘Shandies.

2.2.0. In the country, there are more than 22,000 periodical markets located in the

villages and semi-urban areas, closer to the production centres and attract

both consumers and bulk buyers from the hinterland. These are however all

purpose markets that see sale-purchase of agri-produce, consumers goods,

as also low cost white goods. These are owned and managed by different

institutions-Gram Panchayats, Urban Local Bodies, APMCs,Trusts and

Private Individuals. Further, these are not well organized, lack basic

infrastructure & facilities besides being unhygienic. More importantly, being all

purpose markets, there is no institutional mechanism for an orderly sale-

purchase transaction of agri-produce.

2.3.0. Based on an analysis of the number and type of markets required in the

country, the DFI Committee has recommended to set up about 30,000

markets across the country. These include both retail and wholesale markets.

Further, the Committee has recommended to set up retail agricultural markets

as the foundation of a robust market structure. It has in this regard suggested

to take advantage of the existing periodical markets, and use these locations

to co-host GrAMs as institutionally managed retail agricultural markets, that

are well appointed with both on-market and off-market infrastructure.

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3.0.0. Union Budget Announcement - GrAMs

In the light of the above and in consonance with the recommendation of the

Department of Agriculture, Cooperation and Farmers’ Welfare (DAC&FW), the

Union Budget 2018-19 made an important announcement to the effect that,

22,000 number of ‘Gramin Agricultural Markets’ or GrAMs in short shall be set

up to facilitate retail agricultural marketing in the country.

3.1.0. Agri-market Infrastructure Fund (AMIF)

The Union Budget, 2018 has also demonstrated its commitment to realization

of GrAMs by providing for creation of an Agri-Market Infrastructure Fund

(AMIF) to strengthen infrastructure needed to commission them and upgrade

the operations at 585 e-NAM on-boarded markets.

3.2.0 The DAC&FW will facilitate this Corpus Fund to be hosted at NABARD, and

enable the state governments and Union Territories to borrow funds at

concessional rate of interest of (about 6 per cent) to build needed

infrastructure. The states/UTs in their DPRs under AMIF shall earmark at

least 40% of the total investment on GrAMs.

4.0.0. Gramin Agricultural Markets– Definitions and Objectives

4.1.0. What are GrAMs?

These are defined as:

“Retail agricultural markets in close proximity of the farm gate, that

promote and service a more efficient transaction of the farmers’

produce across the agricultural sub-sectors, by enabling both direct

sale, between the producer and consumer, and aggregation of small

produce-lots for subsequent transaction, both of which can occur either

physically or online”.

4.2.0. What is agricultural produce?

It is defined as:

“An agricultural produce shall mean any farm produce as defined in the

State Marketing Act, and shall include both raw or minimally processed

commodities falling within the domains of agriculture (field crops or

agronomic crops), horticulture, dairy, livestock, fishery & aquaculture,

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apiculture, sericulture, minor forest produce (non-timber forest

produce) and the like.”

4.3.0. GrAMs– Principle Objectives

They shall facilitate two following activities in principle.

i. Direct sale

The farmer-producers may offer any of their agri-produce on sale directly

to the consumers without having to go through the market regulations. The

consumer could be a retail purchaser or a bulk purchaser (trader,

processor, exporter etc); and the sale can occur through a physical

negotiation or via an online trade platform like e-NAM. The

disintermediation of such a transaction will result in transferring maximum

value to the farmer on his produce.

ii. Aggregation of the lots

The small lots of the farmer-producers can be aggregated through an

institutional mechanism (like that of FPO, VPO, etc.) for gaining enhanced

bargaining power and subsequent sale either at the GrAMs via an online

trade platform like e-NAM or by availing primary preparatory or

preconditioning services, such as assaying, cooling, packaging, and

transporting from the GrAMs to APMC/RMC or any other primary or

secondary or terminal wholesale agricultural market.

5.0.0. Advantages of GrAMs

5.1.0 The GrAMs shall be organisationally linked to primary wholesale agricultural

markets like APMCs/RMCs, whether in public or private sector and the two

together shall provide a hub and spoke model of agricultural market structure.

Some of the specific advantages of GrAMs are as follows:

i. Reduce cost of first mile transportation by offering the farmers a

marketing platform in close proximity to the farm gates.

ii. Reduce cost of transaction and enable the farmers to gain higher share

in the consumers’ rupee by facilitating direct sale – both physical and

online.

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iii. Provide an orderly and transparent system of aggregating the small lots

and substitute for the currently opaque & informal system of

aggregation by the village traders.

iv. Provide small farmers the opportunity to target direct sales at markets

of their own volition by providing the associated market linkage

services.

v. Provide greater opportunity for mobilization of farmers through

mechanisms like farmer producer organisations (FPOs-societies,

cooperatives and companies), as well as Village Producer

Organisations (VPOs).

vi. Offer an integrated platform for purchase of agri-inputs, besides other

consumer & white goods.

vii. Serve as a place for dissemination of new information & knowledge

relating to agriculture and other aspects of life.

6.0.0. Location of GrAMs

6.1.0 In principle, GrAMs may be located at the existing periodical markets, which

are owned and managed by different agencies and individuals, such as Rural

Local Bodies (RLBs) – Gram Panchayats, Urban Local Bodies (ULBs) – Town

Panchayats, Municipalities, APMCs/RMCs, Trusts – Temples, WAQF, Private

individuals, etc. At a broader level the ownership is illustrated as follows,

which may actually vary:

SN. Ownership Number

1. Under Local Bodies including Councils 11,811

2. Under Marketing Boards, APMCs 1,274

3. Under Private Sector (Trust, Temples, WAQFs, Individuals etc.)

9,856

6.2.0 These markets are found to assemble at a regular and fixed day interval of 7

days, 15 days and at times seasonally. These markets in general are located

at an average distance of 5-6 kms from the farm gates. They are thus natural

centres for promoting orderly marketing of agri-produce. Hence, the state

governments may co-host GrAMs at these centres by identifying and

delineating an extent of 0.5 to 2.0 acres dedicated to gramin agricultural

markets (GrAMs).

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6.3.0 In addition, it is also seen that some robust retail transaction centres have

evolved and continue to evolve at vantage points of road/transport junctions,

highways etc. The states may also identify such locations for establishing

GrAMs.

7.0.0. Structure and Management of GrAMs

7.1.0 The States and UTs may keep the GrAMs outside the purview of State

Marketing Act or any other such regulatory framework. However, they may

develop and adopt an appropriate ‘Management Framework’ that defines :

the department/agency/organization responsible for promotion &

management

the institutional mechanism for overseeing day to day operations

the infrastructure required

the rollout of facilitative guidelines

all other related support system

7.2.0 In the sections that follow, an illustrative framework is suggested for the States

and Union Territories (UTs) to adopt the same in totality or with amendments

as appropriate to meet the local conditions.

8.0.0. Organisational Mandate

8.1.0 While the State and UTs may decide the Ministry/Department responsible for

establishing and overseeing the operation of GrAMs in accordance with the

Rules of Business prevalent in their jurisdiction, they may take care to keep

these retail markets outside the purview of the State/UT Marketing Act or any

other such Regulatory Act/Order, so as to provide for a liberalized and market

friendly environment.

8.2.0 It is generally seen, that at the state level, the subject of agricultural marketing

is assigned to the Department of Agricultural Marketing or Department of

Cooperation and Agricultural Marketing, which are different from the

Department of Agriculture/Horticulture.

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8.3.0 One of the existing weaknesses of the Departments dealing with Agriculture

and Horticulture, is that the concerned Extension Functionaries do not relate

to marketing and focus on production aspects alone. Given the current need

for market-led production from the perspective of farmers’ incomes, and also

the need for keeping GrAMs outside the purview of State Marketing Acts, the

States/UTs may consider to assign the subject of ‘Retail Agricultural

Marketing’ under the ‘Rules of Business’ to the Department of Agriculture.

This will sensitize the State Agricultural Extension Directorate to the market

demands at the retail level vis-à-vis the recommended production at the farm

level.

9.0.0. Infrastructure for GrAMs

9.1.0 The GrAMs to become operational and deliver the intended services will

require basic infrastructure of two broad categories. These are:

9.1.1 Off-market infrastructure

9.1.2 On-market infrastructure

The States/UTs may ensure that both these are catered to appropriately by

mobilizing different sources of funds.

9.2.0. Off-market infrastructure

9.2.1 This category primarily includes efficient road and transport infrastructure, that

connects the farm produce from the farm gates to GrAMs, and therefrom to

wholesale markets like APMCs or other consumption centres. While road

connectivity may be upgraded/strengthened by tapping budgetary allocations

under ongoing schemes like MGNREGS, PMGSY, PWD works (state &

district roads), the transport system will need strengthening by mostly

promoting private sector, including aiding the youth to become transport-

entrepreneurs (e.g., owner driven carriage transport of varied capacities).

9.2.2 However, in case of cold transport system like reefer vehicles, larger

investments will be necessary for setting up the preliminary pre-conditioning

facilties at the GrAMs. Cooperative institutions, as also APMCs themselves

apart from private entrepreneurs will need to be promoted.

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9.2.3 The Budget 2018-19 also makes a commitment to road infrastructure in its

announcement as follows:

“It is now time to strengthen and widen its ambit further to include

major link routes which connect habitations to agricultural and rural

markets (GrAMs), higher secondary schools and hospitals under Prime

Minister Gram Sadak Yojana (PMGSY). The scheme of PMGSY-III of

MoRD will be converged to develop such link roads”.

9.3.0. On-market infrastructure

9.3.1 Once the agri-produce is transported from the farm gate and delivered at the

entry-gate of the GrAM, there arises a necessity of its efficient handling to

enable the farmers to capture maximum value. The facilities provided will

have to be in sync with the two broad and major mandates of GrAM, viz.,

direct sale and produce aggregation.

9.3.2 Further, the farmer-producers as also other stakeholders including market

functionaries visiting the GrAM will need to be taken care of, by catering to

their market transaction functions and civil amenities.

9.3.3 In the above context, the on-market infrastructures required are of two

following sub-categories:

Basic & support infrastructure

Market transaction infrastructure

These are discussed in the following sub-sections.

9.4.0. Basic & support infrastructure

9.4.1 This refers to the primary infrastructure that will define the place as a market

and create the primary environment to undertake various trade activities.

These are a necessary, but not a sufficient condition to fulfil the mandates of a

GrAM. The different types of infrastructure under this are as follows:

i. Boundary wall

ii. Internal roads and drainage network

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iii. Parking space

iv. Cobbled paving for internal surfaces

v. Office block

vi. Electricity and back-up system

vii. Raised sale-purchase platforms – open and covered

viii. Infrastructure for livestock and fish market

a. Animal shed with feed and drinking water facility.

b. Inspection/Isolation Area

c. Integrated facility for preparation and storage of feed and fodder

d. Primary veterinary care

e. Loading/Unloading ramp

f. Animal weighing facility

ix. Storage (dry, cold, ventilated)

x. Sanitation system including compost pit

xi. Resting place – men and women

xii. Drinking water and canteen

xiii. Toilets – men and women

xiv. Tree cover

9.5.0. Market transaction infrastructure

9.5.1 This category includes facilities that will aid actual trade activities at the GrAM

and constitute sufficient condition for carrying out the GrAM mandates. The

nature of infrastructure will need to suit the production in the region and

include the following:

i. Electronic/normal weighing scales

ii. Assaying laboratory and packaging of dry commodities

iii. Bagging and stitching machines and facilities

iv. Pre-conditioning- cleaning, sorting, grading, washing, waxing, etc. - unit

of minimum capacity

v. Integrated Pack-house of reasonable capacity

vi. Appropriate storage capacity to stage the produce for forward linkage.

vii. Appropriate transport capacity – reefer vehicles, ordinary trucks, etc.

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viii. Primary processing and value addition facilities – mini dal mill/ rice

huller/ mini oil expeller/ de-shelling machines etc.

ix. Other facilities like sheep shearing, baling machines, etc.

x. Information display on transport availability, storage availability and

other services on offer

xi. IT infrastructure to integrate with e-NAM and for market information

including electronic ticker board/ market information system

9.6.0. Funding the infrastructure

9.6.1 To build basic and support infrastructure as in section 9.4.0, allocations

available under MGNREGS can be made use of and the Guidelines do permit

most of these activities. Some facilities like godowns (particularly cold

storage) may have to be funded from the schemes of DAC&FW under MIDH,

AMI, AMIF, RKVY-RAFTAR etc. Likewise electricity will need specific

allocations and states may arrange for it.

9.6.2 As regards infrastructure items vide section 9.5.0 which are transaction-

specific, the States/UTs are advised to tap funds under AMIF-Corpus Fund,

MIDH, AMI sub-scheme, RKVY-RAFTAR etc which are the schemes of

DAC&FW. Supplementary funds may also come from the Ministry of Food

Processing Industries (MoFPI) and Ministry of Textiles (MoT), apart from

state’s own allocations.

10.0.0. Management Structure and Institutional Support

10.1.0. Management structure

A three tier management structure as follows is suggested for purpose of

coordination, support and guidance.

State level coordination committee

District level supervision committee

Market level management committee

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10.1.1. Structure, role and responsibility

i. State level coordination committee

A Committee under the chairmanship of Development Commissioner /

Agricultural Production Commissioner with the following composition is

suggested

ACS/Principal Secretary/Secretary in charge of the Departments of

Agriculture, Horticulture, Dairy, Animal Husbandry & Fisheries,

Sericulture, Cooperation and Agricultural Marketing Rural Development

– Members

Managing Director, State Marketing Board/ Director, Agriculture

Member

- Secretary

Role and responsibility

To develop and adopt ‘GrAM Guidelines’ for establishment and

management of retail agriculture markets of all categories.

To examine and recommend service charges that can be levied in the

markets for approval of competent authority.

To mobilize and advise on funds from different sources including AMIF-

Corpus Fund to build, upgrade and strengthen all categories of

infrastructure related to GrAMs.

To review progress of establishment and operation of GrAMs from time

to time and resolves difficulties in timely progress.

ii. District level supervision committee

A committee under the chairmanship of the Collector/Dy.

Commissioner/District Magistrate may be set up with the following

composition.

CEO, Zilla Parishad - Vice Chairman

Joint Director/Dy. Director, I/c of Agriculture,Horticulture, Sericulture, Animal

Husbandry & Fisheries - Members

Divisional Forest Officer -Member

Joint Director/Dy. Director I/c Agril. Marketing - Member

Dy. Registrar of Cooperative Societies - Member

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Representatives of farmers (farmer associations)

And agril. trade (professional trade associations) - Members

JD/DD I/c Agril. Marketing or JD/DD I/c of Agriculture - Member-Secretary

Role and responsibility

To supervise establishment and management of GrAMs of all

categories.

To ensure adherence to institutional guidelines issued by the State/UT

Government, including levy of service charges.

To ensure mobilization and convergence of resources.

To undertake training and orientation of all GrAM functionaries,

including members of the Management.

To carry out any other responsibility assigned by the State/UT

Government.

iii. Market level management committee

The committees at the GrAM level are the grass root level agencies

responsible for smooth operation and management of GrAMs. Hence, a well

knit committee will be necessary. There are broadly three categories of

periodical markets that exist in the country, and the management committee

will need to be put in place accordingly. These are as follows:

a. Category I markets: Owned by Local Bodies – Both Rural (Gram

Panchayats) and Urban (Town Panchayats, Municipalities) Local

Bodies. In such cases, the following committee composition is

suggested.

Chairperson/President of G.P/Municipality - Chairman

Member/Councillor I/c of markets - Member

Extension Officers I/c of Agriculture, Horticulture, Animal Husbandry,

Fisheries, Sericulture, Cooperation, Marketing - Member

Farmer representatives (2) - Members

Executive Officer/Panchayat Development Officer - Member Secretary

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b. Category II markets: Owned by para-statal agencies like

APMCs/RMCs, Temple committees, WAQF Boards and such other

juristic persons.

A committee with similar composition as in the case of category I

markets is suggested with Head of the concerned para-statal agency or

his nominee as the Chairman.

c. Category III markets: Owned by private individuals, trusts etc. While,

these markets may choose their own nominee as the chairman, the

government functionaries as indicated in the previous two categories

may serve as members of an ‘Advisory Committee’.

Role and responsibility of market level management committees

To establish and maintain an office with minimal staff (Accountant,

Computer Operator, Manager) to take care of Operation &

Management (O&M) functions of GrAM.

To mobilize funds from different sources to build, strengthen and

upgrade needed infrastructure.

To facilitate both direct sale-purchase and aggregation of small

produce lots.

To facilitate both physical & online modes of transactions.

To on-board the market on any of the online trade platform including e-

NAM.

To maintain and update the list of all market participants – traders,

FPOs, farmers etc.

To maintain accounts in prescribed format and in accordance with

prescribed financial norms & procedures.

To set up a grievance redressal and dispute resolution mechanism.

11.0.0. Management Framework and Service Charges

11.1.0. Liberal market environment

11.1.1. The State/UT Government shall provide a liberal environment for the GrAM

functionaries to carry out their trade and transaction functions, and for the

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markets to function in a non-regulated environment. The following approach is

suggested.

GrAMs be kept out of the purview of State Marketing Acts, and if

required by incorporating an explicit provision to this effect.

The Control Orders relating to stock and transport be unrestricted.

The liberalized framework may apply to all agri-commodities transacted

at GrAMs, notwithstanding any provision contrary to the State

Marketing Act.

11.2.0. Levy of service charges

11.2.1 The Market Management Committee will need to build its own funds to meet

recurring expenses. Hence, the following levies are suggested:

i. Levy a rental-charge upto a maximum of Rs.10/day on the producer-

seller using the space assigned at the sale platform.

ii. Levy a service charge preferably not exceeding 0.4 per cent ad

valorem on a bulk buyer (trader, organized retailer, bulk retailer,

exporter, processor etc.).

iii. Levy a nominal entry fee of Rs.5/animal in case of small ruminants; and

Rs.10/animal in case of large ruminants. Lower duties may be

considered for larger transactions.

iv. Levy a charge not exceeding 0.4 per cent ad valorem on the livestock.

v. Parking fee at nominal rate on day basis linked to type of vehicle.

vi. Nominal service charges for assaying and pre-conditioning of produce.

vii. Nominal service charges for packaging and short term storage.

viii. Nominal aggregation / user charges, not exceeding Rs. 75/-, on

aggregation of produce by farmers/ FPOs, etc.

ix. Nominal service charges for delivery of produce to other markets, i.e.

integrated services like packaging, documentation, loading, transport,

etc. Service charges may be in form of revenue sharing as part of

service contract by farmers.

x. Concessions or exemptions may be provisioned for services that

expedite farmers’ group to transact a sale at secondary or terminal

markets.

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Note: These levies/service charges/rentals are only illustrative in nature and

the State/UT government may adopt these in an appropriate manner with a

view to promoting facilitation on (and not restrictive / regulatory) and

egalitarian playing field.

11.3.0. Level playing field

11.3.1 All categories of markets irrespective of the nature of ownership and

management shall be governed by the set of guidelines, institutional

framework, rules & regulations and be offered identical authorization and

power to levy service charges etc.

11.3.2 The States/UTs shall provide a level playing field to all categories of markets

– public sector, private sector, PPP sector, para-statal etc.

12.0.0. Professional Support, Training and Orientation

12.1.0. Professional support

12.1.1 Retail agriculture marketing is a specialized domain, that calls for professional

and competent support. In this regard, the States/UTs are advised as follows:

Hire young professionals with requisite education and experience at the

district level, with a mandate to aid and guide the market level management

committees.

Undertake performance evaluation and analytics of transaction activities

(arrivals, prices, scales, disputes, etc.) and provide inputs to the market

committees.

12.2.0. Training and orientation

National Institutes, namely, MANAGE, Hyderabad and NIAM, Jaipur be

tasked by DAC&FW to prepare training and orientation manuals to address

the needs of management and executive functionaries at different levels.

States/UTs may task the State Agriculture Universities (SAUs) to adopt the

national level manuals with necessary changes to meet local situations,

and make them available in local languages.

SAUs and KVKs may be tasked to conduct orientation & training

programmes for the District and Market level management and executive

functionaries.